Cold medicines including NyQuil Severe Cold & Flu, Advil Sinus Congestion & Pain and Mucinex Sinus Max were sold for years with oral phenylephrine as an active ingredient. Their labels described them as decongestants because federal rules instructed manufacturers to do exactly that.

The science moved while the rulebook stayed put. Studies began casting doubt on oral phenylephrine’s effectiveness in 2007. The consumers’ complaint alleged that the evidence was clear by 2016: taken orally, phenylephrine worked no better than a placebo for congestion. In 2023, an FDA advisory committee voted 16–0 that it was ineffective. The agency’s own review later reached the same conclusion.

Manufacturers and retailers nevertheless had a powerful legal defense. The FDA’s governing order still classified oral phenylephrine as generally recognized as safe and effective and required monograph products to identify themselves as nasal decongestants. When buyers sued under state consumer-protection law, the Second Circuit held that most of those claims would punish companies for using federally prescribed language.

The litigation consolidated nearly one hundred proposed class actions against drugmakers and major retailers. Defendants included Johnson & Johnson Consumer, RB Health, Procter & Gamble, Haleon and Bayer, along with Target, Walmart, CVS, Walgreens, Amazon and other sellers.

Consumers said the products were worth less than what they paid, or worth nothing to them, because they wouldn’t have bought the medicines had they known oral phenylephrine was ineffective. The complaint sought recovery for economic loss. It didn’t make physical injury the basis of the claims addressed by the appellate court.

The $12 billion figure is an allegation about product sales. The opinion did not determine that every sale represented a loss, that every buyer relied on the same statement, or that manufacturers owed that amount in damages.

The complaint alleged that manufacturers produced, marketed and sold oral phenylephrine products despite knowing since at least 2016 that the ingredient didn’t decongest. Buyers challenged statements that the products temporarily relieved congestion, omissions about the ingredient’s alleged ineffectiveness and additional phrases such as “Maximum Strength.”

A federal Racketeer Influenced and Corrupt Organizations Act claim went further. It alleged that a subset of manufacturers used the Consumer Healthcare Products Association, an industry trade group, to misrepresent the scientific evidence, conceal ineffectiveness from consumers and delay FDA reconsideration. According to the complaint, that conduct influenced the evidence available to an FDA advisory committee in 2007.

The appeals court did not decide whether that alleged scheme happened. It dismissed the racketeering claim because the consumers bought through intermediaries and therefore lacked a cause of action under the court’s interpretation of civil RICO.

Over-the-counter drugs can reach the market through two relevant regulatory paths. Under the monograph process, the FDA creates a detailed rule for a category of medicines. A company may sell a covered product without individualized review if the ingredients and labeling match that rule. Under the New Drug Application process, or NDA, the FDA approves a particular drug and its proposed label.

The FDA’s 1994 monograph recognized oral phenylephrine as generally recognized as safe and effective for nasal congestion. It required compliant products to identify themselves as nasal decongestants and use language such as “temporarily relieves nasal congestion.” Congress converted the monograph into an administrative order in 2020, and the order remained operative when the appellate court ruled.

Monograph manufacturers couldn’t independently use the label-changing procedure available to certain brand-name NDA holders. That procedure, known as changes being effected, can allow a brand-name manufacturer to update a label without waiting for prior FDA approval when newly acquired information supports the change.

This distinction produced two outcomes. Claims attacking federally required monograph language were preempted, meaning federal law displaced the state duties on which the consumers relied. Claims involving brand-name NDA drugs returned to the trial court because the appellate record hadn’t addressed whether their manufacturers could have changed the labels themselves.

The documented consumer consequence in this case was economic. Buyers alleged that they paid for congestion relief they didn’t receive and would not have purchased the products if the evidence had been disclosed. The complaint’s sales figure indicates the scale of the market, but the opinion didn’t calculate how much consumers overpaid or determine damages.

The source doesn’t establish physical injuries from oral phenylephrine. It also doesn’t establish that every buyer saw the same advertising, bought for the same reason or experienced the same outcome. Those limits matter: the case concerned alleged spending on ineffective products, not a judicial finding of bodily harm.

What the ruling did establish was a gap in legal recourse. Even after an FDA review concluded that oral phenylephrine wasn’t effective, buyers generally couldn’t use state law to demand labels or advertising that contradicted the FDA’s still-current order.

The strongest established evidence wasn’t a consumer expert’s opinion. It was the FDA’s own account of its review. After considering the available safety and efficacy data, the agency proposed ending oral phenylephrine’s status as a monograph nasal decongestant.

That proposal didn’t immediately change the governing order. As the record stood, companies could continue marketing covered products as decongestants until the FDA finalized a new order. The Second Circuit treated that operative rule as controlling, even while acknowledging that the outcome could appear unfair.

The appeals court affirmed some dismissals, vacated others and sent the surviving issues back for further proceedings. It did not find any manufacturer liable.

Why “Maximum Strength” was different

The monograph dictated the product’s basic decongestant identity and indication. It said nothing about “Maximum Strength” or comparisons with alternatives such as pseudoephedrine. Those were voluntary marketing choices.

The court therefore held that federal requirements didn’t automatically protect such statements. That doesn’t mean the claims are true or that consumers won. The district court must decide whether the state duties match the federal prohibition on false or misleading statements, whether another form of preemption applies and how the litigation should proceed. The appeals court also distinguished “severe symptoms” language, which it didn’t treat as a comparative-strength claim.

Why brand-name NDA products were different

Manufacturers of some brand-name NDA drugs may change labels to remove false, misleading or unsupported effectiveness claims when newly acquired information permits it. The district court hadn’t considered that route. The appellate opinion also said the record was unclear about which products used the NDA process and which relied on the monograph.

The consumers alleged mail and wire fraud as part of a scheme to mislead the public and the FDA. The court never reached the truth of that allegation. Instead, it adopted a rule developed in antitrust cases: indirect purchasers generally can’t sue a manufacturer for passed-on economic injury when an intermediary sits between them.

This was a new holding for the Second Circuit. The court reasoned that limiting claims to direct buyers avoids duplicated recoveries and complicated calculations about how much of an overcharge moved through each level of distribution. It also said concentrating the potential recovery with direct purchasers could give them a stronger incentive to sue.

The opinion acknowledged the rule’s weakness. Manufacturers frequently sell through retailers, so the people who ultimately buy a product may be the ones who absorb the alleged loss. The court cited criticism that the rule can allow major manufacturers to insulate themselves from antitrust and RICO liability by using intermediaries, but concluded that existing Supreme Court precedent favored a bright line.

For the buyers in this case, the practical result was simple: purchasing the medicine at a store rather than directly from its manufacturer closed the civil RICO route, regardless of whether the alleged scheme could otherwise be proven.

The defendants moved to dismiss rather than litigate the allegations through a trial. Their central position was that the challenged decongestant language complied with FDA requirements and that state law couldn’t impose different labeling or advertising duties. The Second Circuit accepted that argument for most monograph claims.

The opinion also noted a Johnson & Johnson website disclosure acknowledging the advisory committee’s 2023 findings. The consumers used it to argue that manufacturers could provide updated efficacy information. The court responded that the ability to make a disclosure wasn’t the same as a state-law duty to make one; imposing that duty would add to the federal requirements.

The appellate record doesn’t contain a judicial admission that manufacturers knew oral phenylephrine was ineffective by 2016. Nor did the court determine whether the defendants’ voluntary “Maximum Strength” statements were false.

The district court must now separate the products governed by the monograph from brand-name products approved through NDAs. It must then decide whether the surviving “Maximum Strength” and NDA claims avoid other forms of federal preemption and whether they state viable claims on their merits.

Questions about manufacturer knowledge, consumer reliance, comparative strength and damages also remain unproven. Vacating a dismissal gives plaintiffs another opportunity to litigate; it isn’t a finding that any defendant deceived consumers or owes compensation.

The source opinion says the FDA’s order removing oral phenylephrine was still only proposed. It doesn’t establish whether or when the agency will finalize that change, what transition it will require or how affected products will be reformulated, relabeled or removed.

The court identified the immediate regulatory fix: the FDA must complete the process for changing the monograph if the operative rule no longer reflects the agency’s scientific conclusion. Until that happens, companies following the monograph face one federal instruction while consumers see an agency saying the ingredient doesn’t work.

A workable resolution also requires identifying which products follow which approval path. The appellate court couldn’t determine from the record which medicines were monograph products and which were NDA products. That distinction now controls whether manufacturers may have had an independent route to change their labels.

Neither step resolves the surviving accusations. Voluntary marketing statements such as “Maximum Strength” still have to be assessed on their own evidence, and any compensation requires proof of a valid claim rather than an assumption that every sale produced the same loss.